OBBA Update

The One Big Beautiful Bill Act (OBBBA) has added hundreds of provisions to the tax code.  Some of the main provisions include.

  • Permanently extending individual tax rates Trump signed into law in 2017 that were set to expire in 2025.
  • The cap on the State and Local Tax Deductions (SALT) was increased to $40,000 from $10,000 for the next five years.
  • Created a tax deduction for overtime resulting in no tax on overtime pay.  This only applies to the overtime premium pad
  • Created a tax deduction for tips resulting in no tax on tips.
  • A new deduction for interest paid on an auto loan for a new vehicle purchased after 2024 that is used for personal use.
  • New Trump Accounts were created allowing parents to create a tax deferred account for the benefit of their children
Most of these new provisions have specific criteria that needs to be met and phaseouts of deductions based on income levels.